Liberal Government's Immigration Reduction to Alleviate Housing Shortage

The Liberal government's recent decision to reduce immigration levels is projected to significantly diminish the demand for new housing units by 2030, according to a new report by the Parliamentary Budget Officer (PBO).

Key Findings from the Parliamentary Budget Officer's Report

• The PBO's report, released on Friday, indicates that by aligning population growth with the government's forecasts, the 2025-2027 immigration levels plan will lower Canada's housing gap by 534,000 units, or 45 percent, by 2030.
• The report projects a housing gap of 658,000 units by 2030, considering the anticipated construction of new housing units.

Changes in Immigration Targets

The federal government recently announced a reduction in the number of new permanent residents, cutting the projection from 485,000 this year to 395,000 in 2025, with further reductions to 380,000 in 2026 and 365,000 in 2027. Previously, Canada was expected to admit about 500,000 new immigrants annually in 2025 and 2026.

Government's Rationale

Immigration Minister Marc Miller stated that the reductions would result in a 0.2 percent decline in population growth over the next two years and decrease the housing supply gap by approximately 670,000 units.

Minister's Perspective

Miller emphasized that these adjustments aim to ease pressure on housing, infrastructure, and social services, ensuring access to quality jobs and homes for all Canadians.

Challenges and Risks

The PBO report highlights "significant risk" associated with the government's immigration forecasts, particularly regarding the potential "outflow of non-permanent residents." The report cautions that the predicted 45 percent reduction in the housing gap might be optimistic, representing upper-bound estimates.

Construction Needs

To achieve a housing gap of 658,000 units by 2030, Canada will need to construct approximately 2.3 million homes, translating to an average of 390,000 units annually from 2025 to 2030.

Broader Context

Canada's population increased by about 1.3 million between January 2023 and January 2024, with 97.6 percent of this growth attributed to immigration, according to Statistics Canada. The government argues that reducing immigration levels will help stabilize the housing market and infrastructure demands.

Opposition Views

Conservative Leader Pierre Poilievre has voiced skepticism, arguing that housing supply must match immigration levels to prevent inflation in housing prices. Poilievre suggested that a Conservative government would align immigration with available housing, jobs, and healthcare services.

Conclusion

The debate over immigration levels and housing supply underscores a critical policy challenge for Canada: balancing population growth with infrastructure capacity. As the government navigates these complexities, the implications for Canada's housing market and socio-economic fabric remain closely watched.